Universal Music has proposed what it calls a “robust remedy” to the European Commission in a bid to allay concerns raised by the European Union’s competition regulator over its bid to buy Downtown Music. However, indie label trade group IMPALA has again called on the EC to block that deal outright, stating “now is the time for Europe to uphold culture, diversity and competition”.
Last month, the EC sent Universal a ‘statement of objections’, explaining that - after an in-depth investigation - it had concluded that Universal’s acquisition of Downtown, and its FUGA, CD Baby, Songtrust and Curve businesses, could “hamper rival labels’ ability and incentive to compete”.
Those concerns mainly related to Universal having sight of data controlled by Curve, which provides rights and royalty management services to independent labels.
In a statement on Friday, Universal said that, following “constructive conversations” with EC officials, it had submitted “a robust remedy” that “comprehensively addresses” the Curve data concerns. It then repeated its claim that making Downtown part of Universal is “about offering independent music entrepreneurs access to world-class tools and support to help them succeed”.
Universal’s Downtown acquisition is part of the major’s bid to boost its distribution and services division, Virgin Music, because indie distribution and artist services is an area where Universal generally lags behind its main overall competitor Sony Music, which owns both The Orchard and AWAL.
The deal will also allow Universal to exert more control of the digital music pipeline, giving the major even more power when it comes to forcing market-wide changes to the streaming business model. Plus it will get access to a plethora of consumption, financial, marketing and contractual data relating to millions of independent artists and labels, just as AI makes that kind of data even more valuable.
Many in the indie sector have been scathing about the deal, with IMPALA organising that opposition within the EU. Ever since the EC launched a more in depth ‘phase two’ investigation into the Downtown deal, it’s seemed likely that Universal would have to propose some kind of remedy to get the transaction approved.
That could involve putting guardrails in place to stop Downtown data from being seen by the rest of Universal. Though given the EC’s forthright statement of objections, it seems more likely that the remedy on the table right now probably involves Universal offloading Curve before completing its Downtown acquisition.
However, IMPALA has been adamant throughout that data guardrails or partial divestments will not address the competition concerns created by the Downtown deal, a position it reiterated in a new statement earlier today.
“The music market is a single ecosystem with many interconnected facets”, it says. “What affects one segment inevitably shapes the others”, whether that be distribution, marketing, reporting, rights, A&R, the broader digital environment and so on.
“The competition issues", it then argues, “must be viewed in the wider context of multiple concerns around the digital market, the whole ecosystem, cultural diversity and the removal of a significant competitor”.
And, regarding the data issues specifically, “the commonalities between the data held on Curve and on other services in the Downtown family, such as FUGA, CD Baby and Songtrust, are clear”. In light of this, “IMPALA seeks a logical extension to the concerns around the proposed transaction”.
IMPALA Executive Chair Helen Smith adds, “We look to the Commission to apply logic in its assessment of both its findings and any proposed remedies and extend where required. We are continuing our discussions with the European Commission as an interested third party to ensure that we reach a sound conclusion in the interests of the whole market and which stands up to scrutiny”.
Following the receipt of Universal’s proposed remedy, the EC has pushed back the deadline for reaching a conclusion on the Downtown deal to 27 Feb.